Dealing with Fraud

Joseph B. Amah
Professor Dr. Wanda E. Allen
HSA 515 Law and Health Care System
Strayer University
Delaware County Campus
June 18, 2013

Abstract

Fraudulent behaviors have deep rooted history in most American organizations, including medical institutions. There is no doubt, therefore, that one of several ways an administrator can succeed as a Chief Nursing Officer (in a facility wrecked by news of abject corruption and empirical fraudulent activities) is being knowledgeable about these historical facts and taking corrective actions. Necessarily, any report of dishonest behaviors such as the one relating to the subject of this paper, will be addressed by a more appropriate applications of provisions of the False Claim Act (as amended in 1986). Due to the inherent risk associated with reporting corrupt corporate behaviors, the FCA regulations entitle whistle blowers to an attractive percentage of funds retrieved as results of qui tam suits. Predicated on these statutory protections, this writer will examine and evaluate the effects of qui tam in the healthcare industry, devise procedures for admissions at medical facilities and subsequently recommend genuine corporate integrity programs with a view of abating or mitigating frauds in these institutions. In conclusion, a plan will be drawn up to protect patients’ information pursuant to applicable federal and state laws.

Evaluate how the Healthcare Qui Tam affects health care organizations. It is this writer’s opinion that evaluating how Qui Tam may affect a healthcare organization presupposes that healthcare institutions are inherently corrupt and that they ordinarily engage in fraudulent behaviors in their day to day activities. Otherwise facilities operating on clean slates who perform due diligence in their routine activities will certainly never be affected by a qui tam action. Be that as it may, in order to properly delve into this question, understanding Qui Tam and some of its connotations may help in understanding the impact a qui tam claim may have on healthcare organizations. This two-word phrase is a short-hand Latin phrase meaning “he who sues on behalf of the king actually sues on behalf of himself or herself” (Showalter, 2012, p. 439). Incidentally, in a Qui Tai action, an individual or employee in possession of evidence that an institution or another person has committed acts of fraud against the government can file a claim on behalf of the state. Such a person is lawfully entitled to a significant portion of funds recovered from the action. This entitlement for a whistle blower is generously given by government as compensation for the high risks taken by these relators. Reverting to the impact of Qui Tam on organizations that venture in institutional violation of the False Claim Act (FCA) for the sole purpose of defrauding federal or state government, there are a number of consequences, a few of which are outlined below. Let us consider a case in point here: if a qui tam case is filed against a healthcare organization on grounds that the facility violated the FCA, that institution would possibly face 1) a likely imposition of excessive fines or seizures, 2) possible revocation of company’s license (permit) to operate, 3) possible prison terms for manager & owners and 3) a possible permanent closure of the facility. As mention supra, the intent of health care organization should never be to corrupt or go in violation of governmental regulation. Nonetheless, where this is the case, whistle-blowers, (protected by the False Claim Act) respond by filing a qui tam claim. Presenting a more precise argument about wrong doings at corporate organization, Showalter (2012) laments that if a corporation is used for the purpose of defeating public convenience and justifying fraudulent behaviors simply for self-enrichments, the law will disregard that entity’s corporate status and then directly place liabilities on the owners of the corporation. For a corporate manager, this is critical because not only would a qui tam claim result in a permanent and disgraceful closure of his/her organization, but the action could eventually end up holding a manager of a discontinued entity criminally liable for corruption.
Provide four (4) examples of Qui Tam cases that exist in a variety of health care organizations. In recent time a number of Qui Tam claims have been filed alleging instances of corrupt institutional practices in many organizations throughout the United States. For the purpose of this pape,r four of these cases will be highlighted beginning with a recent Federal ruling against drug maker Pfizer. In a 1st U.S. Circuit Court of Appeals, a Federal court (for the first time) “upheld a $142 million jury verdict” against the drug maker giant, Pfizer (http://www.lexisnexis.com).The report further reveals that in addition to upholding this unprecedented award, the court approved the use of statistical evidence to prove that the company’s corrupt marketing practices were the cause of an off-label medication as violation of the Racketeering Influenced & Corrupt Organizations Act Theory (RICO). As a result, a class action was made possible against Pfizer under the RICO Theory. This and a few other cases were brought by health plans Kaiser and Aetna who genuinely sought to recover some financial losses from funds they paid to cover huge prescription costs for off-label uses. Interestingly, the ruling shows most attorneys that a class action can be certified that may seek to recover damages caused by fraudulent healthcare institutions. At his point, class action constitutes an integral part of the American legal system. Our second example focuses on a qui tax claim filed under the False Claim Act in a U.S. Appeals Court by a physician against his former employer, V. Pfizer, Inc.(a pharmaceutical company) and its affiliates. The doctor sued his former employer for failing to make appropriate public disclosures of its overall operations. When the lower court, the U.S. District court of Massachusetts denied dismissing the claim for lack of jurisdiction to hear the case, the doctor appealed the decision to the appellate court. In its defense, the company argued that its self-disclosure to the Department of Health & Human Resources, Department of Justice and others appropriate government agencies constituted the applicable disclosure because those institutions were the proper institutions so responsible for governmental investigations. The case of qui tam was thrown out the window on grounds that disclosures made to those governmental agencies were appropriate. The third FCA clam emphasizes the question of who has the right to file a qui tam. In Vermont Agency of Natural Resources (VANR) Vs. the United States, J. Stevens, former Attorney for VANR filed an FCA suit against his former employer for allegedly filling false claims to the FDA. The state of Vermont moved to dismiss the claim on grounds that the state was not a person and therefore not liable under the FCA qui tam in federal courts. When the motion was denied, the State of Vermont filed appeal and the federal court revised the decision in favor of the state.
Fourthly, let us refer to the recent settlement by a few companies over kickbacks following lengthy federal investigations. According to http://lexisnexis.com.libdatab.strayer, recent charges were filed by the U.S. government against EMC for misrepresenting prices and illegally paying consultant fees. In what is considered a monumental settlement, the EMC has paid the U.S. government $87.5 million to settle the suit for allegedly misrepresenting its prices to the General Services Administration and for paying consulting firms kickback fees. Originally, the case was filed in Arkansas in December in 2006. It was later moved to the U.S. District Court for the Eastern District of Virginia. Additionally, the government claimed that EMC violated the federal Anti-kickback Act by giving consulting firms a certain percentage of sales in an effort to persuade government agencies to give business contracts to the vendor. In its bid to prosecute EMC, the government further alleged that EMC knew it could not conduct such a price, therefore compromising to do so in order to offer the lowest prices possible, was fraudulent. Meanwhile, the offices of the Inspector General the, the Defense Criminal Investigative Service, in collaboration with other relevant agencies of government, also assisted in the resolution of the case.
Devise a procedure for admission into a health care facility that upholds the law about the required number of Medicare and Medicaid referrals. Ironically, the black letter rule fails to guarantee the individuals’ right to healthcare by its phony claim that hospitals have no responsibility to give care to any patient (Showalter, 2012). Contrary to this awkward policy and as we devise the admission policies at the new healthcare facility, we hold that access to health must be such that in a timely fashion each patient can be seen by a clinician and be professionally advised and treated. Therefore, in formulating a set of procedures at the facility must fall in line with our above definition. Further, as part of the admission procedures, efforts will be made at not only addressing “current health reform laws but more so legal issues relating to access care” (Showalter, 2012, p. 201). While deeply focusing on hospitals to where most referrals will be forwarded, greater emphasis will be on criteria for service eligibility either for admission or transfer. Physicians and other licensed professionals and clinicians will be the sole authorities to admit, discharge, or approve patients’ transfer to designated facilities for continuation of treatment.
Basic patient registration and admission will be simple. All patients who meet facility’s criteria for admission will be accepted provided, however, that the patient has a written subscription for treatment. Incidentally, individuals will have the option to either register as in-patient or out-patient. In attending to elderly Medicare and Medicaid patients in the referral process, I am moved by the inspiring commentary that “although families in general have abandoned their elderly, some disturbing trends are at work that increasingly threaten the family’s ability to provide support to older members” (Angel & Angel 1997, p.113). Certainly, it is out of such hopeless situation for many elderly that referral of the elderly will be carried with utmost care. As a result, therefore, Medicare and Medicaid transfer of patients will be based on absolute need and medical condition. No referring doctor will be allowed to receive compensation as incentives for referring patients. Doing so will constitute a violation of the Anti-Kickback laws. Violators will be summarily relieved of their posts.
Recommend a corporate integrity program that will mitigate incidents of fraud and assess how the recommendation will impact issues of reproduction and birth. As corporate responsibilities broaden in scope in the healthcare industry, managers of healthcare institutions are increasingly being held to higher expectations. A litany of governmental and other statutory regulations such as the Sarbanes-Oxley Act and an extended list of state regulations all speak to this high public expectation. While boards of directors may be charged with the responsibility of addressing these issues, “directors of healthcare organizations also have important responsibilities that need to be met relating to corporate compliance requirements unique to the healthcare industry. Incidentally, it turns out that in order for a medical facility to meet such high public demand/expectation, a corporate integrity program and/or guidelines must be drawn up and put in place. Subsequently, for the new facility to successfully forge ahead with firmer policies, corporate integrity guidelines must be devised and timely applied at all levels of the institution. The rudiments of these guidelines shall comprise 1) adherence to the application of duty of care, 2) adherence to federal and local regulatory provisions and 3) the exercise of moral principles and ethics in the work place, among others. Let us briefly discuss each of these components. Firstly, with the proper application of duty of care in the work place, employees, especially managers, will exercise suitable amount of care in their decision-making process. Showalter (2012) refers to duty of care as prudence that a reasonable person would carry out under the same or similar circumstances. Secondly, exercise of moral principles and ethics by employees effectively avoids deceitful action and mitigate fraudulent behaviors. For example, the fact that people should not lie is “based on the moral principle of respect for people’s autonomy. Principles are useful in discussions because people who do not agree … on certain actions may be able to agree in principle”(Blais, Hayes, Kozier, & Erb, 2006, p.54). Application of appropriate ethics in the work place will help boost organizational integrity and enhance productivity. Because it applies to the method of inquiry that help people understand the morality of other people (Blais et al. 2006), good ethical practice in the work place helps employees understand the behavior of various groups such as physicians or nurses. In all this, however, healthcare managers must be careful in the way they monitor compliance programs in the workplace. In addition to this set of proposed plans, due diligence, in all its forms, plays an immeasurable part in work pace collaboration. Used proper, the strategy will help mitigate fraud and ensure compliance with all federal and state laws. The degree of care that a competent employee would exercise, which is a legally relevant standard for establishing liability, go a long way in maintaining institutional integrity.
Devise a plan to protect patient information that complies with all necessary laws. It is indeed interesting that “one of the most disturbing flashpoints where technology has outstripped privacy protection involves the healthcare industry” (Halbert & Ingulli, 2009, p. 94). Truly, secured patient healthcare information is important for the patient’s moral and physical healing. And so in order to suitably draw out a plan that will securely protect patients’ health information pursuant to law, covered entities must be regulated to the effect that they should never be allowed to release health information without the concerned patient’s approval. In the event that patient information is sent out without following these guidelines, the action will constitute gross negligence liable to severe punishable breach of contract. Further, employees violating these regulations will be subject to federal charges. Showalter (2012) recounts the differences in state laws on patient’s record retention procedures and alludes that this situation tends to present some challenges for administrators nation-wide. However, in an effort to address this potential problem, we will take all necessary steps to use all applicable provisions of HIPAA which will help in the prevention of unauthorized rerelease of patients’ health information from the facility. Also it will help give patients control over the use of their health information. For example, the facility will require that a signed authorization must be obtained from a patient before marketing or before raising public or community funds for whatever reasons.

References
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Angel, R. & Angel, J.L. (1997). Who Will Care for Us (ed., Vol., pp. vii-234). New York, New York: New York University.
Blais, K. (2006). Professional Nursing Practice (5th ed., Vol., pp.). Upper Saddle River, New Jersey: Julie Levin Alexander.
Corporate Responsibility. (2013, June 14)
A Resource for Health Care Boards of Directors. Retrieved from http://oig.hhs.gov/fraud/docs/complianceguidance/040203CorpRespRsceGuide.pdf Halbert, T & Ingulli, E. (2009). Law & ethics in the business environment: 2010 custom edition (6th ed.). Mason, OH: South-Western Cengage Learning.
Showalter, J. S. (2012). The law of Healthcare Administration (6th ed.). Chicago: Health Administration Press.